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Analyst: Tooling shortage should inspire firms to reevaluate their businesses

By: Kerri Jansen

June 2, 2014

MILWAUKEE — With an anticipated tooling shortage on its way in coming years, toolmakers should evaluate their own businesses and look at ways to best prepare for future demand, says Laurie Harbour.

Last fall, her firm Harbour Results Inc. released its vendor tooling study identifying a $6 billion capacity gap between coming demand and current production. Harbour discussed ways toolmakers can maximize capacity at American Mold Builders Association’s annual convention, held May 14-16 in Milwaukee.

According to the study, in 2012 the North American automotive sector spent $9.25 billion on tooling, both plastic molds and dies; by 2018, they’ll need $15.2 billion. Though those numbers — which Harbour considers to be conservative — are for automotive, all industries can anticipate a similar gap, she said.

The number of tools per vehicle grew 20 percent between 2000 and 2013, and automakers expect that to grow another 25 percent by 2020, Harbour said. As the industry ramps up for increased sales and more new vehicles per year, toolmakers will feel increased pressure to produce while the OEMs they supply look to keep their costs down.

Though toolmakers face many external challenges to getting a tool done correctly and on time, about 10 percent of that gap is capacity toolmakers control, she said. One way automakers maximize their efficiency is to define a niche in which they can excel, she said.

“You have to ask yourself, ‘How do I make improvements? What do I do to differentiate myself so that I can survive and thrive in the industry?’” she said.

“Right now, I think companies have to really revisit and say, ‘What industry do I really want to be in and what’s my role in it?’ And find your niche or what your unique market is.”

Specializing in a particular area can improve a business’ hit rate, with less time wasted on quotes that go nowhere, and give OEMs another reason to keep tool production in the U.S. instead of sending it overseas.

Harbour’s team found an average hit rate among automotive tool makers of around 4-5 percent, she said. A company can improve that number by finding out what they can excel in, talking to their customers about what they’re looking for, and developing that area of their business.

“Those companies that have done a really good job carving out their niche and creating partnerships, they actually are seeing a much higher hit rate,” she said.

Another way to improve efficiency is to collect data on the company’s performance, Harbour said. Monitoring data allows a company to seek out wasted time and capacity and solve those problems.

“The biggest thing that we find in shops is rework hours, rework costs, machines that are not running at the uptime that they should be running at … unmanned time, planned hours vs. actual hours — gather that information and data and let the data tell you what needs to be done,” she said.

Though obstacles in the process are unavoidable, tool makers should focus on things they can control to best take advantage of future demand, Harbour said.

“I get that … program delays and completeness of data and unreasonable targets and all of those things have a huge effect on you and you have no control over that,” she said. “But … in terms of how I schedule, how I manage my rework and my quality loops, matching skills and running machines in an unmanned condition, machining programming and setup — all of these things are things you control and allow you to maximize the use of this production as much as you can. Ultimately this is the goal for every tool shop.”